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When times are hard, some people run to credit cards. There was a time when one needed to drive to a bank branch, wait in line to meet with a banker and then fill out an application for a credit card; only to wait 24 hours to get the results. Oh, have things change!? Nothing is easier than applying online and having the balance available the same day. Within a matter of hours, your fears can become a thing of the past. That is, at least, until the card bill arrives and you wonder how you’re going to pay it. Wait a minute – what about another piece of plastic? And, so the cycle goes on and on mounting more debt each day. Using multiple credit cards is only recommended as long as you have the cash to pay it without incurring interest and most importantly, you understand the dos and don’ts. For example, you DO need to look at the advice below and you DON’T have to worry.
Do: Pay on Time
As simple as it sounds, managing three or four different accounts isn’t straightforward. Indeed, one way to incur fines and lose money is to forget about the payment due dates. Financial stability cannot be attained without discipline. So, book to your calendar a monthly date and time to review your account and pay it. Logically, this date should be prior to the end of your statement cycle. Let’s face it, we’ve all been in the situation before where we omitted to make a payment on time and it isn’t pretty. The great news is that online banking has changed the game. Nowadays, you can set up a direct payment which covers the interest without paying manually. Because it’s automatic, there’s no need to remember to pay on time.
Don’t: Carry Balances
Almost half the population of the United States of America lives paycheck-to-paycheck. Consequently, not carrying balances on credit cards is hard to accomplish for so many. However, it is possible to eradicate balances by using two trusty methods. The first one is to tackle the smallest debt first and close out the account. The alternative is to target the largest balance. The latter is a money-saver because it reduces the amount of interest you will pay each month. Whichever plan you choose, be sure to hack off large chunks of the debt to get rid of it as quickly as possible. While this is happening, pay off the minimum of the other cards.
Do: Consolidate
Are you looking for a way out but can’t get on top of your debts? If this is the case, then https://debtconsolidation.loans/credit-card-consolidation/ is a good place to start your research. The trick is to merge the balances into one so that there is less responsibility and more ease of access. Consolidation is very easy and works for a lot of people. But, please note that you must meticulously review the data before you go for it. Otherwise, it may cost more in the long-term. In fact, consolidate your debt in a way that your total monthly payments save your money and allow to extend the life of the loan without additional interest. 0% credit cards with 0% balance transfer fees may be the solution for you. Why do people do this? It’s a less complicated plan of attack.
Don’t: Apply for Annual Fees
You want a card, not a subscription. Companies make money by charging annual fees, some as high as $75. This resource has an explanation as well as tips to avoid this trap. Nonetheless, keep in mind that each case is different and based on your personal situation, a credit card with an annual fee may be the best option for you. If your credit card company offers cash rewards, you may allocate those to your annual fee. For instance, a $75 fee may be tolerable to you if you get an airline ticket worth $250. Just ensure the rewards that you get are higher than the annual fees. Here, American Express offers a comprehensive list of cards with no annual fees.
Now, you are well equipped with tips and tricks to manage several credit cards. Skip the ‘Don’ts’ and practice the ‘Do’s’.
Money-Smart Millennials 